The FTSE 100 bounced back in early trading today as China’s decision to roll back tariffs on some US exports raised hopes of a pre-Christmas trade war truce.
London’s blue-chip index was up roughly 0.8 per cent to 7,195.1 points this morning as traders reacted to developments in Beijing.
China’s finance ministry today said the country will waive tariffs for some soybean and pork shipments from the US, although it did not specify the quantities involved.
China imposed 25 per cent tariffs on the products in July last year in retaliation to tariffs levied by Washington amid concerns about intellectual property theft by Chinese firms.
The waiver comes as the world’s two largest economies seek to thrash out a phase one trade deal to bring to an end the escalating trade war that has rocked markets for almost 18 months.
Asian markets also reacted positively to the announcement, with the Nikkei 225 and Hong Kong’s Hang Seng index up 0.2 and one per cent respectively.
Meanwhile, European markets appeared unfazed by the announcement from Germany that factory output slumped 1.7 per cent in October – its largest fall in a decade.
Germany’s Dax and the French Cac 40 both nudged up in early trading.
Michael Hewson, chief market analyst at CMC Markets, said it had been “rather a strange week” for the FTSE 100 and global equity markets amid uncertainty about US-China trade discussions.
“As a result of these mixed signals investors appear to be taking a more cautious view as to what may happen next, and are likely to wait until after 15 December, when the next set of US tariffs on Chinese goods are set to kick in,” he said.
Primark owner Associated British Foods was among the top risers on the FTSE this morning after a solid trading update, while other consumer-facing firms such as Marks & Spencer and Sports Direct helped to boost the blue-chip index.
“Last month’s GfK consumer confidence survey implied that the public was in ‘wait and see mode’ ahead of the general election and Brexit,” said Russ Mould, investment director at AJ Bell.
“Early indications suggest that Black Friday was good for retailers, suggesting that consumers might have become more willing to start spending money.”
He added: “The true test will be post-Christmas trading updates which will show whether Black Friday simply brought forward festive consumer spending or whether the shops were busy right up to Christmas Day.”
The FTSE 100 lost underperformer Hiscox in a reshuffle earlier this week after a series of weather-related catastrophes hit the insurer. Easyjet has stepped up in its place.